95-1672 and 95-1881
In the Supreme Court of the United States
OCTOBER TERM, 1995
BLACK TELEVISION WORKSHOP OF LOS ANGELES, INC.,
AND ARNOLD L. KUPETZ, TRUSTEE IN BANKRUPTCY,
PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION, ET AL.
ROSA WARE, BOOKER T. WADE, JR.,
GWENDOLYN MAY-BARLOW,
AND HOPE SMITH BYNUM,
CONDITIONAL CROSS-PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION, ET AL.
ON PETITION AND CROSS-PETITION FOR A WRIT OF
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
BRIEF FOR THE RESPONDENTS IN OPPOSITION
DREW S. DAYS, III
Solicitor General
Department of Justice
Washington, D.C. 20530
(202)514-2217
WILLIAM E. KENNARD
General Counsel
CHRISTOPHER J. WRIGHT
Deputy General Counsel
DAVID SILBERMAN
KAREN L. GULICK
Counsel
Federal Communications
Commission
Washington, D.C. 20554
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QUESTION PRESENTED
Whether the court of appeals correctly held that
the Federal Communications Commission's revoca-
tion of petitioners' construction permit was excepted
from the automatic stay provision of the federal bank-
ruptcy code as "an action or proceeding by a gov-
ernmental unit to enforce such governmental unit's
police or regulatory power," 11 U.S.C. 362(b)(4).
(I)
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TABLE OF CONTENTS
Page
Opinions below . . . . 1
Jurisdiction . . . . 2
Statement . . . . 2
Argument . . . . 6
Conclusion . . . . 15
TABLE OF AUTHORITIES
Cases:
Arminio, In re, 38 B.R. 472(Bankr. D. Corm. 1984) . . . . 10
Board of Governors v. MCorp Financial, Inc.,
502 U.S. 32(1991) . . . . 10
Carlton Fruit Co., In re, 86 B.R. 254 (Bankr. M.D.
Fla. 1988) . . . . 10
Commerce Oil Co., In re, 847 F.2d 291(6th Cir.
1988) . . . . 13
Eddleman v. United States Dept of Labor, 923 F.2d
782 (lOth Cir. 1991) . . . . 8, 12
FCC v. Sanders Bros. Radio Station, 309 U.S. 470
(1940) . . . . 3
Fugazy Express, Inc., In re, 124 B.R. 426 (S.D.N.Y.
1991), appeal dismissed, 982 F.2d 769 (2d Cir.
1992) . . . . 13, 14
Missouri v. United States Bankruptcy Court, In re,
647 F.2d 768 (8th Cir. 1981), cert. denied, 454 U.S.
1162(1982) . . . . 9, 11
NLRB v. Continental Hagen Corp., 932 F.2d 828
(9th Cir. 1991) . . . . 8, 11
NLRB v. Edward Cooper Painting, Inc., 804 F.2d
934 (6th Cir. 1986) . . . . 9
Penn Terra Ltd. v. Department of Envt'l
Resources, 733 F.2d 267(3d Cir. 1984) . . . . 9, 12
Professional Sales Corp., In re, 56 B.R. 753(N.D.
III. 1985) . . . . 10
(III)
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IV
Cases-continued:
Page
Regents of Univ. Sys. of Georgia v. Carroll,
338 U.S. 586 (1950) . . . . 3, 9
Sam Daily Realty, Inc., In re, 57 B.R. 83 (Bankr.
D. Haw. 1985) . . . . 10
Second Thursday Corp., 22 FCC-2d 515, recon.
granted, 25 F.C.C. 2d 112 (1970) . . . . 14
United States v. Nicolet, Inc., 857 F.2d 202
(3d Cir. 1988) . . . . 8
Wade, In re, 948 F.2d 1122 (9th Cir. 1991) . . . . 10
Statutes, regulations and rule:
Bankruptcy Code, 11 U.S.C. 101 et seq . . . . 3
11 U.S.C. 362(a) . . . . 3
11 U.S.C. 362(a)(l) . . . . 3
11 U.S.C. 362(a)(2) . . . . 3, 4
11 U.S.C. 362(a)(3) . . . . 10, 11
11 U.S.C. 362(b) . . . . 4
11 U.S.C. 362(b)(4) . . . . 4, 6, 7, 8, 9, 10, 11, 12
11 U.S.C. 362(l))(5) . . . . 4, 7, 9, 12
Communications Act of 1934, 47 U.S.C. 151 et seq . . . . 2
47 U.S.C. 301 . . . . 2, 3
47 U.S.C. 301-336 . . . . 3
47 U.S.C. 307(a) . . . . 3, 9
47 U.S.C. 307(C) . . . . 3
47 U.S.C. 309(h) . . . . 3
47 U.S.C. 309(k) . . . . 3
47 U.S.C. 310(d) . . . . 3, 5
47 U.S.C. 312(a) . . . . 3
47 U.S.C. 319(a) . . . . 5
47 U.S.C. 319(C) . . . . 5
47 C.F.R. Pt. 73 . . . . 3
Sup. Ct. Rule 13.4 . . . . 15
Miscellaneous:
H.R. Rep. No. 595, 95th Cong., 1st Sess. (1977) . . . . 4
S. Rep. No. 989, 95th Cong., 2d Sess. (1978) . . . . 8
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In the Supreme Court of the United States
OCTOBER TERM, 1995
No. 95-1672
BLACK TELEVISION WORKSHOP OF LOS ANGELES, INC.,
AND ARNOLD L. KUPETZ, TRUSTEE in BANKRUPTCY,
PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION, ET AL.
No. 95-1881
ROSA WARE, BOOKER T. WADE, JR.,
GWENDOLYN MAY-BARLOW,
AND HOPE SMITH BYNUM,
CONDITIONAL CROSS-PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION, ET AL.
ON PETITION AND CROSS-PETITION FOR A WRIT OF
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
BRIEF FOR THE RESPONDENTS IN OPPOSITION
OPINIONS BELOW
The judgment of the court of appeals (Pet. App. 5a-
8a) affirming the final order of the Federal Communi-
cations Commission (FCC) is unpublished, but the
decision is noted at 70 F.3d 639 (Table).
The final order and decision of the FCC (95-1881
Cross-Pet. App. 59a-93a), revoking petitioners' con-
struction permit and disqualifying cross-petitioners
(1)
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2
as broadcast permittees or licensees, are reported at
8 F. C.C. Red. 4192. Orders of the FCC denying a peti-
tion for reconsideration (Cross-Pet. App. 94a-103a)
and denying review (Cross-Pet. App. 108a-109a) are
reported at 8 F.C.C. Red. 8719 and 9 F.C.C. Red. 4477,
respectively. An order denying a second petition for
reconsideration (Cross-Pet. App. 104a-107a) is un-
reported. The initial decision of the administrative
law judge (Cross-Pet. App. la-58a) is reported at 7
F.C.C. Red. 7819.
JURISDICTION
The judgment of the court of appeals was entered on
September 18, 1995. A petition for rehearing was
denied on November 17, 1995. Pet. App. 10a. Peti-
tioners filed a petition for a writ of certiorari on
February 14, 1996, and by letter of the Clerk of the
Court dated February 15, 1996, were granted leave to
refile by April 15, 1996. The petition was refiled by
that date and docketed on April 17, 1996 (No. 95-1672).
Cross-petitioners filed a conditional cross-petition for
a writ of certiorari on May 17, 1996 (No. 95-1881). The
jurisdiction of this Court is invoked under 28 U.S.C.
1254(1).
STATEMENT
1. The Federal Communications Commission
(FCC or Commission) exercises regulatory authority
over the radio spectrum pursuant to the Communi-
cations Act of 1934, 47 U.S.C. 151 et seq. The Act
charges the FCC. with "maintain[ing] the control of
the United States over all the channels of radio
transmission" and "providing] for the use of such
channels, but not the ownership thereof, by persons
for limited periods of time, under licenses granted by
Federal authority." 47 U.S.C. 301. The Act further
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3
provides that "no such license shall be construed to
create any right, beyond the terms, conditions, and
periods of the license." Ibid; see FCC v. Sanders
Bros. Radio Station, 309 U.S. 470, 475 (1940) ("The
policy of the Act is clear that no person is to have
anything in the nature of a property right as a result
of the granting of a license.").
The grant of a license confers a limited right, and
the FCC retains regulatory authority over the use of
the license during the license term. Licensees are
required to comply with restrictions set forth in
Title III, Part I of the Act, 47 U.S.C. 301-336, and
governing regulations, 47 C.F.R. Pt. 73. A license
may be suspended, modified, or revoked for violation of
those rules. 47 U.S.C. 312(a). Furthermore, transfer
or assignment of the license during the license term,
as well as renewal of the license, are subject to FCC
approval. 47 U.S.C. 307(c), 309(h) and (k), 310(d),
Section 307(a) directs the Commission to exercise
its licensing authority in the "public convenience,
interest, or necessity." 47 U.S.C. 307(a); see also
Regents of Univ. Sys. of Georgia v. Carroll, 338 U.S.
586,598 (1950).
2. The automatic stay provision of the Bankruptcy
Code, 11 U.S.C. 101 et seq. (Code), provides for a broad
stay of litigation, lien enforcement, and other actions
that would interfere with the property of a debtor's
estate. 11 U.S.C. 362(a). In particular, Section
362(a)(1) provides that the filing of a petition in bank-
ruptcy operates as a stay of "the commencement or
continuation * * * of a judicial, administrative, or
other action or proceeding against the debtor that
was or could have been commenced before the com-
mencement of the case under this title." 11 U.S.C.
362(a)(l). Section 362(a)(2) stays "the enforcement,
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4
against the debtor or against property of the estate, of
a judgment obtained before the commencement of the
case under this title," 11 U.S.C. 362(a)(2). The pur-
pose of the stay is twofold to provide the debtor a
"breathing spell" from his or her creditors, and to
protect creditors from a race cm the debtor's assets.
See H. It. Rep. No. 595, 95th Cong., 1st Sess. 340
(1977).
The automatic stay is not absolute, however, and
Congress has enumerated a series of exceptions in 11
U.S.C. 362(b). In particular, the filing of a petition in
bankruptcy does not operate as a stay "under sub-
section (a)(l) of this section, of the commencement or
continuation of an action or proceeding by a govern-
mental unit to enforce such governmental unit's
police or regulatory power." 11 U.S.C. 362(b)(4).
Likewise, the statute precludes a stay "under sub-
section (a)(2) of this section, of the enforcement of a
judgment, other than a money judgment, obtained in
an action or proceeding by a governmental unit to
enforce such governmental unit's police or regulatory
power." 11 U.S.C. 362(b)(5). Together, those pro-
visions permit a governmental body to commence,
continue, and enforce an action against the debtor or
his or her estate, where that governmental body is
acting to protect its regulatory, rather than purely
pecuniary, interests.
3. Petitioners in this case are Black Television
Workshop of Los Angeles, Inc. (BTW), a non-profit
corporation, and Arnold L. Kupetz, its trustee in
bankruptcy. Conditional cross-petitioners have all
served as officers and directors of BTW. In 1983,
the FCC granted BTW a construction permit for
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5
a noncommercial television station. 1. Several years
later, three members of BTW'S board of directors
notified the FCC of a dispute over control of the
corporation, and an FCC investigation "revealed
substantial questions concerning BTW'S qualifica-
tions to be a permittee or licensee. After a lengthy
hearing, an administrative law judge revoked BTW'S
construction permit, pending appeal. 95-1881 Cross-
Pet. App. la-58a. The ALJ found, inter alia, that
there had been an unauthorized transfer of control of
BTW, in violation of 47 U.S.C. 310(d), and that BTW'S
initial applications and subsequent dealings with the
Commission were "replete with instances" of misre-
presentations and lack of candor. Id. at 47a-49a. On
appeal, the Commission upheld the findings and
conclusions of the ALJ. Id, at 59a-93a. A subsequent
petition for reconsideration was denied, id. at 94a-
103a, as were a further petition for reconsideration,
id. at 104a-107a, and a self-styled application for re-
view, id. at 108a-109a.
BTW sought review in the court of appeals and, on
the same day, filed a petition in the bankruptcy court
for reorganization under Chapter 11 of the Code.
BTW then filed a motion for remand in the court of
appeals, arguing that the automatic stay provision of
the Code precluded the FCC from taking further
action concerning the revocation of BTW'S construc-
tion permit. In a brief, unpublished order, the court
___________________(footnotes)
1 Pursuant to 47 U.S.C. 319(a), the FCC licensing process is
initiated by the grant of a construction permit. Upon comple-
tion of the station within the time specified, and upon a
showing that the permit's terms, conditions, and obligations
have been satisfied, the Commission will grant the permittee a
license in the public interest. 47 U.S.C. 319(c).
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6
denied the motion, holding that "[t]he [FCC'S] action
is excepted from the automatic stay provisions of the
bankruptcy code." Pet. App. 2a (citing 11 U.S.C.
362(b)(4)). BTW then filed a motion for rehearing and
suggestion for rehearing in bane concerning the
motion to remand, which the court of appeals denied.
Id. at 4a. During this time, BTW'S bankruptcy case
was converted to a Chapter 7 liquidation proceeding,
and Kupetz was appointed trustee.
After argument on the merits, the court of appeals
affirmed the decision of the FCC in a brief, unpub-
lished judgment, finding "ample evidence on the
record to support the FCC's decisions." Pet. App. 6a-
7a. 2 One month after the court entered its judgment,
and eight months after his appointment in the
bankruptcy case, Kupetz tiled his first appearance in
the court of appeals, seeking substitution of parties,
vacatur of the court of appeals' judgment, and remand
to the FCC to permit negotiation of a settlement.
BTW also filed a petition for rehearing and sug-
gestion for rehearing in bane. In unpublished orders,
the court of appeals denied both Kupetz's motion and
BTW'S petition. Id. at 9a, 10a, 11a.
ARGUMENT
Petitioners' objections to the court of appeals'
ruling lack merit. The court of appeals' decision is
consistent with the rulings of this Court and is not in
conflict with any decision of another court of appeals.
Further review is not warranted.
1. a. The court of appeals correctly concluded that
"[t]he [FCC'S] action is excepted from the automatic
___________________(footnotes)
2 The court did not revisit its earlier ruling on the non-
applicability of the automatic stay.
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7
stay provisions of the bankruptcy code." Pet. App. 2a
(citing 11 U.S.C. 362(b)(4)). Section 36.%3)(4) provides
that the automatic stay does not apply to the com-
mencement or continuation of a proceeding by a
governmental unit to enforce its police or regulatory
power. 11 U.S.C. 362(b)(4).
Paragraph (4) excepts commencement or con-
tinuation of actions and proceedings by govern-
mental units to enforce police or regulatory
powers. Thus, where a governmental unit is
suing a debtor to prevent or stop violation of fraud,
environmental protection, consumer protection,
safety, or similar police or regulatory laws, or
attempting to fix damages for violation of such a
law, the action or proceeding is not stayed under
the automatic stay.
S. Rep. No. 989, 95th Cong., 2d Sess. 52 (1978).
Section 362(b)(5) works in tandem with Section
362(b)(4), to permit entry of all judgments and en-
forcement of all non-monetary judgments obtained
under Section 362(b)(4).
Paragraph (5) makes clear that the exception
extends to permit an injunction and enforcement
of an injunction, and to permit the entry of a
money judgment, but does not extend to permit
enforcement of a money judgment. Since the
assets of the debtor are in the possession and
control of the bankruptcy court, and since they
constitute a fund out of which all creditors are
entitled to share, enforcement by a governmental
unit of a money judgment would give it pref-
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8
erential treatment to the detriment of all other
creditors.
S. Rep. No. 989, supra, at 52.
Courts have applied two tests, the "pecuniary
purpose test" and the "public policy test," to deter-
mine whether particular governmental actions are
entitled to the regulatory powers exception to the
automatic stay provision. The pecuniary purpose test
asks whether the governmental action relates
primarily to matters of the public interest, health,
and safety, or rather merely to the protection of the
government's pecuniary interest in the debtor's
property. See, e.g., NLRB v. Continental Hagen
Corp., 932 F.2d 828, 833 (9th Cir. 1991); Eddleman v.
United States Dep't of Labor, 923 F.2d 782, 790 (lOth
Cir. 1991); United States v. Nicolet, Inc., 857 F.2d 202,
209 (3d Cir. 1988). The public policy test distin-
guishes between governmental proceedings that aim
to effectuate public policy and those that adjudicate
private rights. Continental Hagen, 932 F.2d at 833
Eddleman, 923 F.2d at 790; Nicolet, 857 F2d at 209.
Both tests aim at discerning whether the govern-
mental unit is acting in a regulatory capacity-to
effect compliance with laws that it administers-or in
a pecuniary or "private" capacity-to recover money
owed it as a creditor.
Only in the latter case does the governmental unit
stand in the position of any other creditor, such that
its efforts to obtain a monetary judgment will be
subject to the stay. By contrast, in the former case
the action will fall squarely within the exception
carved out by Section 362(b)(4). See Continental
Hagen, supra (since enforcement of unfair labor
practice laws satisfies both tests and is excepted from
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9
stay, entry of cease and desist order and monetary
relief permissible, though enforcement of monetary
relief stayed); NLRB v. Edward Cooper Painting,
Inc., 804 F.2d 934 (6th Cir. 1986) (unfair labor practice
proceeding excepted from stay); Penn Terra Ltd. v.
Department of Envt'l Resources, 733 F.2d 267 (3d Cir.
1984) (enforcement of state environmental protection
statute excepted from stay); In re Missouri v. United
States Bankruptcy Court, 647 F.2d 768 (8th Cir. 1981)
(enforcement of State's grain laws, where primarily
related to protection of State's pecuniary interest in
debtor's property, not excepted from stay), cert.
denied, 454 U.S. 1162 (1982).
The court of appeals here correctly applied the
plain language of the statute, which exempts actions
involving a "governmental unit's police or regulatory
power[s]" from the automatic stay. 11 U.S.C
362(b)(4) and (5). As this Court has recognized, "the
Commission's regulatory powers center around the
grant of licenses." Carroll, 338 U.S. at 599. The
Commission is directed to exercise that power in the
"public convenience, interest, [and] necessity." 47
U.S.C. 307(a); see Carroll, 338 U.S. at 598. When the
Commission acts to enforce compliance with its
governing statute and regulations, and to assure use
of the radio spectrum in the public interest, it acts to
protect its regulatory, rather than pecuniary, in-
terests. The FCC's action revoking BTW'S construc-
tion permit was purely regulatory in nature, and thus
is exempt from the stay.
The judgment of the court of appeals is also
consistent with interpretations of the governmental
regulatory powers exception made by other federal
courts. In many analogous contexts, courts have held
that various license revocation-type actions fall
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10
within the governmental regulatory powers exception
to the automatic stay. See, e.g., In re Wade, 948 F.2d
1122 (9th Cir. 1991) (disciplinary proceedings against
attorney excepted from automatic stay); In re
Professional Sales Corp., 56 B.R. 753 (N.D. 111. 1985)
(revocation of status permit for operation of
hazardous waste site excepted from stay); In re
Carlton Fruit Co., 86 B.R. 254 (Bankr. M.D. Fla.
1988) (imposition of conditions upon citrus dealer's
license excepted from automatic stay); In re Sam
Daily Realty, Inc., 57 B.R. 83 (Bankr. D. Haw. 1985)
(suspension of realtor's license and imposition of
judgment of fine excepted from automatic stay;
enforcement of payment of fine subject to stay); In
re Amninio, 38 B.R. 472 (Bankr. D. Corm. 1984)
(revocation of driver's license excepted from auto-
matic stay). 3.
___________________(footnotes)
3 This Court's decision in Board of Governors v. MCorp
Financial, Inc., 502 U.S. 32 (1991), is not to the contrary.
MCorp held that administrative proceedings by the Board of
Governors of the Federal Reserve to enforce regulations
concerning the operation of bank holding companies are
excepted from the automatic stay under Section 362(b)(4). In
its argument, MCorp had contended that the "ultimate objec-
tive" of the proceedings was to "exercise control of corporate
assets." Id. at 40. Hence, MCorp asserted, Section 362(a)(3),
staying any act to obtain possession of, or to exercise control
over, property of the estate, precluded continuation of the
administrative proceedings.
This Court ruled that Section 362(b)(4) clearly permitted
the government to continue its enforcement proceedings. The
Court stated that "[i]t is possible, of course, that the Board
proceedings * * * may conclude with the entry of an order
that will affect the Bankruptcy Court's control over the
property of the estate: 502 U.S. at 41. The Court suggested
that "[i]f and when" an order were entered interfering with
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11
b. Despite the clear language of the statute, peti-
tioners argue (Pet. 8-9) that a stay' of any FCC
revocation proceeding against a federal bankruptcy
debtor is necessary "to protect creditors." In parti-
cular, petitioners assert (Pet. 9-10) that Section
362(b)(4)'s preference to "police or regulatory power"
encompasses "enforcement of laws affecting health,
welfare, morals, and safety, but not regulatory laws
that directly conflict with control of the res or
property by the bankruptcy court." That argument
lacks merit.
Petitioners' argument is not supported by In re
Missouri v. United States Bankruptcy Court, supra.
That case addressed the ability of the State to seize
and sell grain in the possession of the -debtor. The
court of appeals found that the grain laws that the
State sought to enforce were "primarily relate[d]
to the protection of the pecuniary interest in the
debtors' property and not to matters of public safety
or health." 647 F.2d at 776 (emphasis added). The
court's general statement concerning "regulatory
laws that directly conflict with the control of the res
or property by the bankruptcy court" ibid., thus has
no bearing upon a case such as the instant one in
which a substantial non-pecuniary regulatory inter-
est is found to exist.
Petitioners also invoke (Pet. 12) NLRB v.
Continental Hagen Corp., supra, to bolster their
___________________(footnotes)
the property of the estate in violation of Section 362(a)(3),
"then it may well be proper" for the bankruptcy court to exer-
cise concurrent jurisdiction. Petitioners' claim (Pet. 13)-that
any final agency action "adversely affecting the license of [a]
regulated business" may require a stay-does not follow from
MCorp, which neither concerned a license revocation pro-
ceeding nor addressed the statutory provisions at issue here.
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12
claim that a regulatory action must be stayed if
enforcement "would `be detrimental to creditors."
That case does not support that proposition. Rather,
Continental Hagen illustrates the distinction be-
tween the government as regulator and the govern-
ment as creditor. The court of appeals recognized the
authority of the NLRB to enforce its unfair labor
practice laws, not only through the issuance of cease
and desist orders, but also by ordering monetary
relief. Noting, however, that enforcement of the
monetary relief would be stayed-a proposition not
contested by the government-the court of appeals
relied upon the monetary judgment limitation of 11
U.S.C. 362(b)(5). Despite petitioners' assertion to the
contrary (Pet. 12), the court made no reference to any
generalized prohibition against enforcement where
enforcing a judgment would be "detrimental to
creditors."
Indeed, no court of appeals has ruled that the Code
stays regulatory action otherwise permitted by the
plain language of Section 362(b)(4) and (5) merely
because of a "detrimental effect" upon creditors. The
courts have acknowledged that, although the goal of
preserving the corpus of the debtor's funds and estate
is normally central to the statutory scheme, that
policy may conflict with other important govern-
mental goals. See, e.g., .Eddleman, 923 F.2d at 790
We must assume that Congress chose its language
[in Section 362(b)(4)l with the full recognition that
the exception would allow governmental actions to
encroach on the court's control of debtors' affairs.").
"In enacting the exceptions to section 362, Congress
recognized that in some circumstances, bankruptcy
policy must yield to higher priorities" Penn Terra,
733 F.2d at 278 (rejecting argument that State could
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13
not enforce its environmental laws against debtor
where compliance with injunction required expendi-
ture of money to detriment of creditors); see also In
re Commerce Oil Co., 847 F.2d 291,297 (6th Cir. 1988)
("[W]e decline to adopt [the] premise that preserva-
tion of the debtor's estate is of greater priority in
the statutory scheme set forth by Congress in Title
11 than is the enforcement of environmental protec-
tion laws explicitly intended to be excepted from the
automatic stay."). As the courts have recognized,
despite the possibility of indirect effects upon credi-
tors, Congress chose to establish express exceptions
to the automatic stay.
2. a. Petitioners suggest (Pet. 9-11) that the opin-
ion of the court of appeals is in conflict with a decision
of a district court. However, the proposition cited by
petitioners is contained in dicta, and any "conflict"
created by the dicta of a district court does not
warrant review by this Court.
In re Fugazy Express, Inc., 124 B.R. 426 (S.D.N.Y.
1991), appeal dismissed, 982 F.2d 769 (2d Cir. 1992),
involved proceedings by a purchaser of an FCC
license at an authorized trustee's sale against an
unauthorized, but earlier, post-petition transferee
Not aware of the bankruptcy proceedings, the FCC
had approved the first assignment of the license.
Deciding who controlled the debtor's interest in the
license post-petition, the district court acknowledged
two critical facts: (1) any interest in the license was
limited by the regulatory authority of the FCC, and
(2) on the facts of the case, the question of the
application of the stay provisions to regulatory
proceedings by the FCC was not before the court, 124
B.R. at 431.
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14
The court nevertheless asserted that "[t]he revoca-
tion of a license by the FCC does not affect the health
or safety of the public, so there is no exemption to the
stay under [Section 362(b)(4)l." 124 B.R. at 431. In
light of the district court's express recognition that
the applicability of the stay provisions to FCC
regulatory proceedings was not before it, this state-
ment is sheer obiter dicta. Fugazy thus has no
bearing in fact or law on the question presented in
this case.
b. Petitioners also argue that the decision of the
court of appeals conflicts with FCC policy, as pre-
viously upheld by the court of appeals. Petitioners
cite (Pet. 11) Second Thursday Corp., 22 F.C.C. 2d
515, recon. granted, 25 F.C.C. 2d 112 (1970), for the
proposition that the FCC must concur with a stay and
defer to the bankruptcy court in order to protect
creditors. Second Thursday is inapposite.
That case involved an application, by the licensee's
trustee in bankruptcy, for assignment of the license
to a bidder at auction, where allegations of wrong-
doing had been made against the licensee but no ad-
judication had yet occurred. In such circumstances,
where a proposed assignment is pending and claims
against the licensee have not been adjudicated, the
Commission has found that protecting innocent
creditors is one factor to consider in approving the
assignment, so long as the alleged wrongdoers would
receive no benefit from the FCC's action. Second
Thursday does not stand for the proposition that the
FCC will stay all regulatory enforcement action
against a licensee merely because the licensee has
entered bankruptcy. Where wrongdoing has been
clearly established and finally adjudicated, the FCC
has a strong interest in assuring enforcement of its
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15
governing statute and regulations in order to protect
the public interest committed to the agency's charge.
3. Because the petition for a writ of certiorari
should be denied for the foregoing reasons, this
Court's Rule 13.4 requires that the conditional cross-
petition also be denied}
CONCLUSION
The petition and conditional cross-petition for a
writ of certiorari should be denied.
Respectfully submitted.
DREW S. DAYS, III
Solicitor General
WILLIAM E. KENNARD
General Counsel
CHRISTOPHER J. WRIGHT
Deputy General Counsel
DAVID SILBERMAN
KAREN L. GULICK
Counsel
Federal Communications
Commission
MAY 1996
___________________(footnotes)
4 In any event, we note that the conditional cross-petition
attempts to relitigate the facts of the construction permit revo-
cation proceeding. Cross-petitioners' contentions were ad-
dressed in the initial decision of the administrative law judge,
Cross-Pet. App. la-58a, and the decision of the full Commission,
id. at 59a-93a, and the court of appeals correctly found "ample
evidence on the record" to support the FCC's decisions, Pet.
App. 6a-7a. None of cross-petitioners' fact-bound claims would
warrant review by this Court.
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